Health insurance check coming for thousands in Virginia

Millions of consumers will see the results of one of the provisions of the Affordable Care Act in the form of a rebate check from their insurance company this summer.

On June 21, the U.S. Department of Health and Human Servicesannounced that 12.8 million Americans with health insurance were due $1.1 billion in rebates under the act's medical loss ratio rule that took effect last year. In Virginia, the total due is approximately $43 million, which will be shared among 686,738 consumers.

The Affordable Care Act established the 80/20 rule requiring health insurance companies to spend at least 80 percent of revenue from premiums on actual health care and no more than 20 percent on administration, CEO pay and profits. Before the law, some companies were spending as little as 60 percent, said Kathleen Sebelius, secretary of health and human services, in a media conference call. "Consumers are finally getting a fair value," she added.

The average rebate nationally will be $151 per affected household, paid out by Aug. 1.

The breakdown in Virginia is as follows: in the individual market, $5 million will be returned to 265,000 subscribers, for an average of $32; in the small group market, $22 million will be divided among 236,171 people, for an average of $181; and in the large group market, $16 million will go to 185,417 people for an average of $167.

The rebates may be paid in a variety of ways:

• a rebate check in the mail;

• a lump-sum reimbursement to the same account that was used to pay the premium if it was paid by credit card or debit card;

• a direct reduction in future premiums;

• an employer providing one of the above rebate methods, or applying the rebate in a manner that benefits its employees. Generally, the rebate in the large group market, will be paid directly to employers to be distributed to their employees according to employees' contributions to premiums.

The health reform bill also requires insurance companies to send a letter to subscribers every year they miss the 80/20 mark. The letter will explain the rule's purpose, how far the insurance company fell short of the goal, and the percentage of premium it owes in rebates.

Likewise, those insurance companies that met or exceeded the standard in the 2011 coverage year for 66.7 million consumers — a robust 89 percent in the large-group market and 62 percent in the individual market — will explain the 80/20 rule and notify their subscribers that they met the standard. By Aug. 1, all the information will be publicly available on http://www.HealthCare.gov.